CIRCULAR TO SHAREHOLDERS In relation to PART I Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions (RRPT) of a Revenue or Trading Nature PART II Proposed Renewal of Authority to Purchase Own Shares IMPORTANT DATES AND TIMES: Last Date and Time for Lodgement of Proxy Form : 16 May 2017 at 10 am Date and Time of Annual General Meeting : 18 May 2017 at 10 am Place of Annual General Meeting : Damai Beach Resort Teluk Bandung Santubong 93756 Kuching Sarawak This Circular is dated 25 April 2017 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any doubt as to the course of action you should take, you should consult your stock- broker, bank manager, solicitor, accountant or other professional advisor immediately. Bursa Malaysia Securities Berhad has not perused this Proposed Renewal of Authority to Purchase Own Shares of up to 10% of the Issued and Paid-Up Share Capital of Sarawak Plantation Berhad as they are exempt documents. Bursa Malaysia Securities Berhad takes no responsibility for the contents of this Circular, makes no representations as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Circular.
Transcript
CIRCULAR TO SHAREHOLDERSIn relation to
PART IProposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions
(RRPT) of a Revenue or Trading Nature
PART IIProposed Renewal of Authority to Purchase Own Shares
IMPORTANT DATES AND TIMES:Last Date and Time for Lodgement of Proxy Form : 16 May 2017 at 10 am
Date and Time of Annual General Meeting : 18 May 2017 at 10 am
Place of Annual General Meeting : Damai Beach Resort Teluk Bandung Santubong 93756 Kuching Sarawak
This Circular is dated 25 April 2017
THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
If you are in any doubt as to the course of action you should take, you should consult your stock-broker, bank manager, solicitor, accountant or other professional advisor immediately.
Bursa Malaysia Securities Berhad has not perused this Proposed Renewal of Authority to Purchase Own Shares of up to 10% of the Issued and Paid-Up Share Capital of Sarawak Plantation Berhad as they are exempt documents.
Bursa Malaysia Securities Berhad takes no responsibility for the contents of this Circular, makes no representations as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Circular.
DEFINITIONS
Except where the context otherwise requires, the following definitions shall apply throughout this Circular.
Act : The Companies Act 2016 as amended from time to time and any re-enactment thereof
AGM : Annual General Meeting
Board : Board of Directors of SPB
Bursa Malaysia : Bursa Malaysia Securities Berhad (635998-W)
Code : The Malaysian Code on Take Overs and Mergers 1998
CPO : Crude Palm Oil
Danawa : Danawa Resources Sdn. Bhd.
Directors : The directors for the time being of Sarawak Plantation Berhad and shall have the same meaning as in Section 2 of the Act and as defined in Section 2(1) of the Capital Market Services Act 2007 and includes any person who is or was within the preceding 6 months of the date of which the terms of the transaction were agreed upon, a director or chief executive of SPB, its subsidiary or holding company as per Paragraph 10.02(c) of the Listing Requirements
EMS : Estate Management System
EPS : Earnings per Share
FFB : Fresh Fruit Bunches
IS : Intuitive Systems Sdn. Bhd.
KUB Sepadu : KUB Sepadu Sdn. Bhd.
Listing Requirements : Bursa Malaysia’s Main Market Listing Requirements as amended from time to time
Major Shareholder : This shall have the same meaning as in Paragraph 1.01 of the Listing Requirements
Manis Oil : Manis Oil Sdn. Bhd.
Market Day : Any day from Mondays to Fridays (both days inclusive) which Bursa Malaysia is open for trading of securities
NA : Net Assets
n/a : Not Applicable
Persons Connected : This shall have the same meaning as in Paragraph 1.01 of the Listing Requirements
PK : Palm Kernel
Proposals : Proposed Renewal of Shareholders’ Mandate and the Proposed Renewal of Authority to Purchase Own Shares collectively
Proposed Renewal of : Proposed Shareholders’ Mandate for SPB and / or its Group of Companies to enter Shareholders’ Mandate into RRPT of a Revenue or Trading Nature for the period from this AGM to the next AGM
Proposed Share Buy Back : Proposed purchase and / or holding of own shares of up to 10% of the Issuedor Proposed Renewal of and Paid-Up Share Capital of SPBAuthority to Purchase Own Shares
Record of Depositors : A record provided by Bursa Malaysia to SPB under Chapter 24 of the Rules of Bursa Malaysia Depository
Related Parties : A director, major shareholder or persons connected with such director or major shareholder. For the purpose of this definition, “director” and “major shareholder” shall have the same meanings as stated above and in Paragraph 10.02 of the Listing Requirements
Related Party Transaction : A transaction entered into by the Company or its subsidiaries which involves the interest, direct or indirect, of a Related Party
RRPT : Recurrent Related Party Transactions
SC : Securities Commission
SPB or the Company : Sarawak Plantation Berhad
SPB Shares : Ordinary shares of the Company of RM1.00 each
the Group : Sarawak Plantation Berhad and its subsidiaries
Treasury Shares : The SPB shares purchased by SPB that can be retained, distributed as dividend or resold
Name of Subsidiaries
Azaria : Azaria Sdn. Bhd.
SPAD : Sarawak Plantation Agriculture Development Sdn. Bhd.
SPPD : Sarawak Plantation Property Development Sdn. Bhd.
Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter gender. Words importing persons include corporations.
Any reference to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Act and used in this Circular shall have the meaning assigned to it under the Act.
Any reference to a time of day shall be a reference to Malaysian time.
TABLE OF CONTENTS
PART I Page
1. Introduction 1 2. Proposed Renewal of Shareholders’ Mandate 2
2.1 Details of the Proposed Renewal of Shareholders’ Mandate 2
2.2 Listing Requirements 2
2.3 Principal Activities of SPB and its Group of Companies 3
2.4 Classes of Related Party 3
2.5 Nature and Terms of the RRPT and their Estimated Values 4
2.6 Conditions of Shareholders’ Mandate 5
2.7 Review Procedures in relation to RRPT 6
2.8 Statement by the Board Audit Committee 7
3. Rationale 7 4. Financial Effects of the Proposed Renewal of Shareholders’ Mandate 7 5. Directors’ and Major Shareholders’ Interest in the Proposed Renewal of Shareholders’ Mandate 7 6. Directors’ Recommendation 8 7. Annual General Meeting 8 8. Further Information 8
APPENDIX 1 17
Registered Office:8th Floor Wisma NAIM2½ Mile Rock Road93200 Kuching
Date : 25 April 2017
Board of Directors:
Datuk Amar Abdul Hamed bin Sepawi - Chairman
Polit bin Hamzah - Group Managing Director
Hasmawati binti Sapawi - Non Independent Non Executive Director
Umang Nangku Jabu - Independent Non Executive Director
Datu Haji Chaiti bin Haji Bolhassan - Independent Non Executive Director
Azizi bin Morni - Independent Non Executive Director
Ali bin Adai - Independent Non Executive Director
To the Shareholders of Sarawak Plantation Berhad
Dear Sir / Madam,
PART I
PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RRPT OF A REVENUE OR TRADING NATURE
1. INTRODUCTION
On 29 March 2017, an announcement was made to Bursa Malaysia that SPB intends to seek its shareholders’ approval on the proposed renewal of mandate for SPB to enter into RRPT of a revenue or trading nature at the forthcoming AGM.
The purpose of this Circular is to provide the shareholders with the details, financial effects and rationale relating to this proposal which will be tabled as an ordinary resolution at the forthcoming AGM.
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2. PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE 2.1 Details of the Proposed Renewal of Shareholders’ Mandate
SPB, at its last AGM held on 20 May 2016, had obtained a mandate from its shareholders to enter into RRPT from time to time. The authority conferred by the shareholders shall in accordance with the Listing Requirements lapse at the conclusion of the forthcoming AGM unless authority for its renewal is obtained from the shareholders of the Company.
2.2 Listing Requirements
Chapter 10 (Part E) paragraph 10.09 of the Listing Requirements allows the Company to seek its shareholders’ mandate for its related party transactions involving recurrent transactions of a revenue or trading nature which are necessary for its day to day operations subject to the following:
(a) The transactions are in the ordinary course of business and are on terms not more favourable to the related party than those generally available to the public;
(b) The shareholders’ mandate is subject to annual renewal and disclosure is made in the Annual Report of the aggregate value of transactions conducted pursuant to the shareholders’ mandate during the financial year where the aggregate value is equal to or more than the threshold prescribed under Paragraph 10.09(1);
(c) The listed issuer’s circular to shareholders for the shareholders’ mandate includes the information as may be prescribed by the Exchange. The draft circular must be submitted to the Exchange together with a checklist showing compliance with such information;
(d) In a meeting to obtain the shareholders’ mandate, the interested director, interested major shareholder or interested person connected with a director or major shareholder and where it involves the interest of an interested person connected with a director or major shareholder, such director or major shareholder, must not vote on the resolution to approve the transactions. An interested director or interested major shareholder must ensure that persons connected with him abstain from voting on the resolution approving the transactions; and
(e) The listed issuer immediately announces to the Exchange when the actual value of a RRPT entered into by the listed issuer exceeds the estimated value of the RRPT disclosed in the circular by 10% or more and must include the information as may be prescribed by the Exchange in its announcement.
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2. PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE (continued) 2.3 Principal Activities of SPB and its Group of Companies
The principal activity of SPB is investment holding.
The principal activities of its subsidiaries and its associated company are as follows:
Name of Subsidiaries Effective Ownership Principal Activities Interest (%) Azaria 75 Dormant
SPAD 100 Cultivation of oil palm and processing of FFB
SPPD 100 Dormant
SPPH 100 Property Investment
SPSSB 95 Provision of management, agronomic and consultancy services
SP Suai 60 Cultivation of oil palm
SP Karanbungan 70 Cultivation of oil palm
Telliana 100 Cultivation of oil palm
Name of Associated Company
WTSSB 35* Dormant
* Held through SPSSB
2.4 Classes of Related Party
There are 2 classes of parties for which the Proposed Renewal of Shareholders’ Mandate applies, namely:
(a) Directors; and
(b) Major Shareholders.
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2. PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE (continued) 2.5 Nature and Terms of the RRPT and their Estimated Values
The RRPT entered into by SPB and its Group of Companies relating to the provision of products and services thereof and the purchase of FFB from the related parties which are necessary for its day to day operations are as follows:
Related Parties which have recurrent transactions with SPB or its Group ofCompanies Danawa and SPAD
IS and SPAD
Manis Oil and SPAD
Interested Directors/ Major Shareholders and Persons Connected
Datuk Amar Abdul Hamed bin Sepawi is a director of SPB and also a major shareholder of Danawa
Datuk Amar Abdul Hamed bin Sepawi is a director of SPB and his sister is a director and shareholder of IS
Datuk Amar Abdul Hamed bin Sepawi is a director of SPB and a shareholder of Ta Ann Holdings Berhad, a company who holds 100% equity interest in Manis Oil
Nature of Transactions
Rental and support fee for satellite broadband services
Software support, customization and maintenance fee for EMS
Sale of FFB
Estimated Value of Transactions from preceding year’s Circular dated 27 April 2016 (RM’000)
250
270
2,016
Actual Value transacted from 20 May 2016 to 7 April 2017 (RM’000)
194
215
3,057
Estimated Value of Transactions from 18 May 2017 to the next AGM# (RM’000)
196
230
4,000
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Reasons for deviation, if the actual value exceeds estimated value by 10% or more
n/a
n/a
(a) Highercurrent CPOprice comparedto the CPOprice used to calculate the Estimated Value in the precedingyear’s Circular;(b) Highervolumedelivered to Manis Oil compared to volume used to calculate Estimated Value in the preceding year’s Circular.
An announcement was made on 22 March 2017.
2.6 Conditions of Shareholders’ Mandate
The shareholders’ mandate is subject to annual renewal and shall continue to be in force until:
(a) The conclusion of the next AGM of the Company following the general meeting at which the shareholders’ mandate was passed, at which it will lapse, unless by a resolution passed at the meeting, the authority is renewed;
(b) The expiration of the period within which the next AGM after the date is required to be held pursuant to Section 340(2) of the Act but shall not extend to such extension as may be allowed pursuant to Section 340(4) of the Act; or
(c) Revoked or varied by resolution passed by the shareholders in general meeting
Notes:# The estimated value of transactions for the period from 18 May 2017 to the next AGM are based on information, budgets and forecasts available at the point of estimation and the actual value of transactions may vary accordingly
A sum of RM246,781 was due and owing to the Group by Manis Oil as at 31 December 2016. This sum was paid in January 2017.
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2. PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE (continued) 2.5 Nature and Terms of the RRPT and their Estimated Values (continued)
Related Parties which have recurrent transactions with SPB or its Group ofCompanies KUB and SPAD
Interested Directors/ Major Shareholders and Persons Connected
Datuk Amar Abdul Hamed bin Sepawi is a director of SPB and a shareholder of Medan Sepadu Sdn. Bhd., a company who holds 30% equity interest in KUB. Polit bin Hamzah is a director of SPB and also a director of KUB
Nature of Transactions
Purchase of FFB
Estimated Value of Transactions from preceding year’s Circular dated 27 April 2016 (RM’000)
n/a
Actual Value transacted from 20 May 2016 to 7 April 2017 (RM’000)
n/a
Reasons for deviation, if the actual value exceeds estimated value by 10% or more
n/a
Estimated Value of Transactions from 18 May 2017 to the next AGM# (RM’000)
16,800
2. PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE (continued) 2.6 Conditions of Shareholders’ Mandate (continued)
whichever is the earlier.
A disclosure of the aggregate value of the RRPT conducted pursuant to the shareholders’ mandate shall be made in the Annual Report, including a breakdown of the aggregate value of the RRPT made during the financial year where:
(a) The consideration, value of assets, capital outlay or costs of the RRPT is RM1 million or more; or
(b) The percentage ratios of such RRPT is 1% or more;
whichever is higher.
2.7 Review Procedures in relation to RRPT
SPB has in place a system of internal control which reviews procedures and guidelines and which must be strictly adhered to. This will ensure that transactions with mandated related parties are made on generally acceptable commercial terms not more favourable to the mandated related parties, they are at arm’s length basis and are not prejudiced to the interests of the minority shareholders.
The procedures for review of RRPT are as follows:
(a) Where provision of services are concerned, the contracted rates are based on the best competitive rate tendered/quoted that complies with all the specifications and shall remain so throughout the period of the contract unless varied by the parties in writing;
(b) Where sales or purchases are concerned, the contracted rates are based on the best competitive rate tendered / quoted that complies with all the specifications and shall remain so throughout the period of the contract unless varied by the parties in writing;
(c) At least 2 other contemporaneous transactions with unrelated third parties for similar products / services and / or quantities will be used as comparison, wherever possible, to determine whether the price and terms offered to / by the related parties are fair and reasonable and comparable to those offered to / by other unrelated parties for the same or substantially similar type of products / services and / or quantities; ;
(d) In the event that the quotation or comparative pricing from unrelated parties cannot be obtained, the transaction price will be based on the current market price / rates that are agreed under similar commercial terms for transactions with third parties, business practices and policies on terms which are generally in line with the industry’s standard and ensure that the RRPT is not detrimental to SPB and its Group of Companies;
(e) The Company’s thresholds for the approval of RRPT are as follows:
Nature of RRPT Limit of Authority Approving Authority per transaction (RM)
Provision of Services, Up to 500,000 Managing Director Sale or Purchase Up to 1 million Management Tender Committee Above 1 million Board of Directors
Rentals Up to 500,000 Managing Director Up to 1 million Management Tender Committee Above 1 million Board of Directors
(f) Reports on RRPT and situations that may give rise to conflict of interest situations are compiled and submitted to the Board Audit Committee for its review on a quarterly basis.
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2. PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE (continued) 2.8 Statement by the Board Audit Committee
The Members of the Board Audit Committee are as follows: Name Designation Directorship
Umang Nangku Jabu Chairman Independent Non Executive Director
Datu Haji Chaiti bin Haji Bolhassan Member Independent Non Executive Director
Azizi bin Morni Member Independent Non Executive Director
Ali bin Adai Member Independent Non Executive Director
The Audit Committee reviews the procedures as outlined above annually or as and when deemed necessary and is of the opinion that the Group has in place adequate procedures and processes to monitor, track and identify RRPT in a timely and orderly manner, are sufficient to ensure that RRPT are not more favourable to the mandated related party than those generally available to the public and are not to the detriment of the minority shareholders.
3. RATIONALE As the RRPT entered into with the mandated related parties are made on generally acceptable commercial terms not more favourable to the mandated related parties, they are at arm’s length basis and are not prejudicial to the interests of the minority shareholders, it will enhance the business operations of SPB and its Group of Companies. These relationships are forged based on high standards of integrity which seeks to propel SPB and its Group of Companies to greater productivity and efficiency.
The Proposed Renewal of Shareholders’ Mandate will also be advantageous to SPB and its Group of Companies because it will enable SPB and its Group of Companies to enter into transactions described in Section 2.5 above in a timely fashion and eliminates the necessity for SPB on each occasion, pursuant to the financial limits imposed under Paragraph 10.08 of the Listing Requirements to seek the shareholders’ approval as and when potential transactions with related parties arise. In this manner, administrative time, inconvenience and costs associated with the convening of such meetings can be substantially reduced yet the corporate objectives of the Group will not be adversely affected.
4. FINANCIAL EFFECTS OF THE PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE The Proposed Renewal of Shareholders’ Mandate will have no effect on the Issued and Paid-Up Share Capital of SPB and is not expected to have any material effect on the net assets of SPB.
5. DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTEREST IN THE PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE The Directors and / or Major Shareholders and the Persons Connected, as named below, are interested in the Proposed Renewal of Shareholders’ Mandate as they are also directors and / or major shareholders of the companies stated in Section 2.5 above.
These Directors have and will continue to abstain from all board deliberations and voting pertaining to the Proposed Renewal of Shareholders’ Mandate and together with the Major Shareholders and Persons Connected will not vote in respect of their direct or indirect interests on the resolutions approving the RRPT at the AGM. They have undertaken to ensure that the Persons Connected with them shall abstain from voting on the resolution approving the transaction at the AGM.
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5. DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTEREST IN THE PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE The direct and indirect interests of these Directors and / or Major Shareholders and the Persons Connected to them in SPB as at 31 March 2017 are as follows:
Name Direct Indirect
No. of Shares % No. of Shares %
Datuk Amar Abdul Hamed bin Sepawi 200,000 0.07 84,994,424* 30.40
Polit bin Hamzah 50,000 0.02 - - * Deemed interest pursuant to Section 8 of the Act by virtue of his interest in Cermat Ceria Sdn. Bhd. and Custodev Sdn. Bhd.
Saved as disclosed above, none of the other Directors and / or Major Shareholders and the Persons Connected to them have interest, direct or indirect, in the Proposed Renewal of Shareholders’ Mandate.
6. DIRECTORS’ RECOMMENDATION The Directors of SPB (with the exception of those mentioned in Section 5 above), having considered all aspects of the Proposed Renewal of Shareholders’ Mandate are of the opinion that the Proposed Renewal of Shareholders’ Mandate is in the best interest of SPB and recommends that you vote in favour of the resolution to be tabled at the forthcoming AGM.
7. ANNUAL GENERAL MEETING The resolution to vote on the Proposed Renewal of Shareholders’ Mandate is set out in the Notice of Meeting in the Annual Report 2016 for the 20th AGM to be held at Damai Beach Resort Teluk Bandung Santubong 93756 Kuching Sarawak on Thursday, 18 May 2017 at 10 am.
If you are unable to attend and vote in person at the AGM, you should complete and return the Form of Proxy enclosed in the Annual Report 2016 to the registered office of the Company's Share Registrar, Tricor Investor & Issuing House Services Sdn. Bhd. at Unit 32-01 Level 32 Tower A Vertical Business Suite Avenue 3 Bangsar South No.8 Jalan Kerinchi 59200 Kuala Lumpur as soon as possible and in any event not less than 48 hours before the time set for holding the AGM. The completion and lodgement of the Form of Proxy will not preclude you from attending and voting in person at the AGM should you subsequently wish to do so.
8. FURTHER INFORMATION Shareholders are advised to refer to APPENDIX 1 of this Circular for further information.
Yours faithfully,For and on Behalf of Sarawak Plantation Berhad
Umang Nangku JabuIndependent Non Executive Director
TABLE OF CONTENTS
PART II Page
1. Introduction 10 2. Details 11 3. Funding 11 4. Ranking of Shares Purchased by the Company 12 5. Pricing 12 6. Risk Factors 12 7. Reasons and Rationale 12 8. Financial Effects of the Proposed Share Buy Back 13 8.1 Share Capital 8.2 Earnings 8.3 NA 8.4 Working Capital 9. Directors’ and Substantial Shareholders’ Shareholding 14 10. Historical Share Price 15
11. Public Shareholding Spread 15 12. Implication Relating to the Malaysian Code on Take Overs and Mergers 1998 15 13. Purchase, Resale and Cancellation of SPB Shares made in the preceding 12 months 16 14. Conditions of the Proposed Share Buy Back 16 15. Directors’ and Substantial Shareholders’ Interests 16 16. Directors’ Recommendation 16 17. Annual General Meeting 16 18. Further Information 16
APPENDIX 1 17
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Registered Office:8th Floor Wisma NAIM2½ Mile Rock Road93200 Kuching
Date : 25 April 2017
Board of Directors:
Datuk Amar Abdul Hamed bin Sepawi - Chairman
Encik Polit bin Hamzah - Group Managing Director
Puan Hasmawati binti Sapawi - Non Independent Non Executive Director
Puan Umang Nangku Jabu - Independent Non Executive Director
Datu Haji Chaiti bin Haji Bolhassan - Independent Non Executive Director
Encik Azizi bin Morni - Independent Non Executive Director
Encik Ali bin Adai - Independent Non Executive Director
To the Shareholders of Sarawak Plantation Berhad
Dear Sir / Madam,
PART II
PROPOSED RENEWAL OF AUTHORITY TO PURCHASE OWN SHARES
1. INTRODUCTION On 29 March 2017, an announcement was made to Bursa Malaysia that SPB intends to seek its shareholders’ approval to renew the authority to purchase its own shares.
SPB, at its last AGM held on 20 May 2016, had obtained its shareholders’ approval to purchase up to 10% of the total Paid Up Share Capital of the Company as quoted on the Main Market of Bursa Malaysia. The said authority shall in accordance with the Listing Requirements lapse at the conclusion of the forthcoming AGM unless it is renewed.
Accordingly, the Directors of the Company proposes to seek the shareholders’ approval for the renewal of the authorisation to enable the Company to purchase up to 10% of the Issued and Paid-Up Share Capital of SPB as quoted on Bursa Malaysia.
The purpose of this Circular is to provide the shareholders with the details, financial effects and rationale relating to this proposal which will be tabled as an ordinary resolution at the forthcoming AGM.
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2. DETAILS The Proposed Share Buy Back is subject to compliance with Section 127 of the Act and any prevailing laws, rules and regulations, orders, guidelines and requirements issued by the relevant authorities at the time of purchase.
As at 31 March 2017, the total Issued and Paid Up Share Capital of SPB is RM280,000,000 comprising of 280,000,000 ordinary shares of RM1.00 each. The maximum number of shares which may be purchased by the Company will not exceed 28,000,000 ordinary shares or 10% of the total Issued and Paid Up Share Capital of the Company as at the point of purchase. The Proposed Share Buy Back will be effected through the existing appointed stockbroker.
The approval from the shareholders for the Proposed Share Buy Back shall be effective immediately upon the passing of the ordinary resolution for the Proposed Share Buy Back at the forthcoming AGM up to the conclusion of the next AGM or until the expiry of the period within which the next AGM is required by law to be held or revoked or varied by an ordinary resolution of the shareholders of the Company in general meeting, whichever occurs first.
The Directors may deal with SPB shares in the following manner:
(a) Cancel all or part of the SPB shares so purchased; or
(b) Retain all or part of the SPB shares so purchased as Treasury Shares for distribution as dividends to the shareholders and / or resale on the market of Bursa Malaysia and / or to be subsequently cancelled.
When the Directors intend to cancel or retain the SPB shares so purchased as Treasury Shares or distribute as dividends to the shareholders and / or resell the SPB shares on the market or both, together with the rationale for the alternatives chosen, as and when the Proposed Share Buy Back is executed, appropriate announcement will be made to Bursa Malaysia. In the event the Company ceases to hold all or part of such shares as a result of the above actions, the Company may further purchase and / or hold such additional number of shares (in aggregate with the shares then still held by the Company) which shall not exceed 10% of the total Issued and Paid Up Share Capital of the Company for the time being quoted on Bursa Malaysia.
3. FUNDING The maximum amount of funds to be allocated for the Proposed Renewal of the Share Buy Back will not exceed the audited retained earnings and / or share premium account of the Company. As at 31 December 2016, the audited retained earnings and share premium account of the Company were standing at RM50,861,156 and RM60,968,951 respectively.
The Proposed Share Buy Back will be funded from internally generated funds and / or borrowings of the Group. The proportion of which will depend on the quantum of purchase consideration as well as the availability of internally generated funds and / or borrowings and repayment capabilities of the Company at the time of the purchase. In the event the Proposed Share Buy Back is to be partly financed by external borrowings, the Company expects that it will be capable of repaying such borrowings and that such funding is not expected to have any material effect on the cash flows of the Company and the Group.
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4. RANKING OF SHARES PURCHASED BY THE COMPANY The Treasury Shares so purchased or to be purchased pursuant to the Proposed Share Buy Back shall not be entitled to any of the rights attached to the existing SPB shares of the Company as to voting, dividends and participation in any other distribution or otherwise are suspended and the Treasury Shares shall not be taken into account in calculating the number or shares or a class of shares in the Company for any purposes including, without limiting to the generality of this provision or any law or requirements of the Articles of Association of the Company or the Listing Requirements on substantial shareholdings, takeovers, notices, the requisitioning of meetings, the quorum and the result of a vote on a resolution at a meeting.
5. PRICING In accordance with the Listing Requirements, the Company may only purchase its own shares on the Main Market of Bursa Malaysia at a price which is not more than 15% above the weighted average market price for the shares for the past 5 market days immediately prior to the date of purchase.
The Company may only resell the Treasury Shares on the Main Market of Bursa Malaysia at a price which is:
(a) Not less than the weighted average market price for the shares for the 5 market days immediately prior to the resale; or
(b) A discounted price of not more than 5% of the weighted average market price for the shares for the 5 market days immediately prior to the resale provided that the resale takes place no earlier than 30 days from the date of purchase and the resale price is not less than the cost of purchase of the shares being resold.
6. RISK FACTORS The Proposed Share Buy Back, if implemented, will reduce the financial resources and working capital of the Group and may result in the Group foregoing other investment opportunities that may emerge in the future and may also reduce the amount of financial resources available for distribution in the form of dividends to the shareholders of SPB.
On the other hand, the disadvantage is mitigated by the prospect that the financial resources of the Group may recover or increase upon reselling of the Treasury Shares. The Board of Directors, in exercising any decision on the Proposed Share Buy Back, will be mindful of the interests of the Company and its shareholders.
7. REASONS AND RATIONALE The Proposed Share Buy Back, if exercised, is expected to potentially benefit the Company and its shareholders in the following manner:
(a) The Company may be able to stabilise the supply and demand of its shares in the open market and hence support its fundamental values;
(b) Where the SPB shares are bought back and retained as Treasury Shares, these Treasury Shares can be distributed as dividends in future to reward shareholders or provide an opportunity for the Company to realise potential gains if the Treasury Shares are subsequently resold at prices higher than the purchase price;
(c) Where the SPB shares are cancelled, the shareholders of the Company may enjoy an increase in value of their investment in the Company due to the increase in the net EPS as a result of reduction in the Issued and Paid-Up Share Capital of the Company upon cancellation of the shares.
The Proposed Share Buy Back is not expected to cause any potential material disadvantage to the Company or its shareholders as any share buy back exercise will be undertaken only after in-depth consideration of the financial resources of SPB and of the resultant impact on its shareholders.
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8. FINANCIAL EFFECTS OF THE PROPOSED SHARE BUY BACK
The effects of the Proposed Share Buy Back on the share capital, earnings, NA and working capital of SPB are set out below:
8.1 Share Capital
The Proposed Share Buy Back will have no impact on the share capital if all the shares purchased by the Company are held as Treasury Shares.
The impact on the share capital of the Company if the Treasury Shares are subsequently cancelled is as below:
Issued and Paid Up Share Capital Number of Shares
Existing share capital before cancellation of Treasury Shares as at 31 March 2016 280,000,000
Less: Cancellation of Treasury Shares (assumed maximum shares bought back and cancelled) (28,000,000)
Resultant share capital after cancellation of Treasury Shares 252,000,000
8.2 Earnings
Depending on the number of SPB shares purchased and the purchase price of the shares, the Proposed Share Buy Back may increase the EPS of the Group. Similarly, on the assumption that the SPB shares so purchased are treated as Treasury Shares, the extent of the effect of the earnings of the Group will depend on the actual selling price, the number of Treasury Shares resold and the effective gain or interest saving arising thereon.
8.3 NA
The effect of the Proposed Share Buy Back on the NA per share of the Group is dependant on the number of SPB shares which the Company buys back, the purchase price of the SPB shares and the treatment of the SPB shares so purchased.
The Proposed Share Buy Back is likely to reduce the NA per share of the Group if the purchase price exceeds the NA per share of the Group at the time of purchase and will increase the NA per share of the Group if the purchase price is less than the NA per share of the Group at the time of purchase.
8.4 Working Capital
The Proposed Share Buy Back will reduce the working capital of the Group, the quantum of which depends on, among other things, the number of SPB shares eventually purchased and the purchase price of SPB shares. The cashflows of the Group will be reduced relative to the number of SPB shares eventually purchased and the purchase price of the shares.
Upon resale of the Treasury Shares, the working capital and cashflows of the Group will increase. Again the quantum of increase in the working capital and cashflows will depend on the actual selling price of Treasury Shares and the number of Treasury Shares resold.
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9. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ SHAREHOLDING Save for the proportionate increase in the percentage of shareholdings and / or voting rights of the shareholders of the Company as a result of the Proposed Share Buy Back, none of the Directors and Substantial Shareholders of the Company and persons connected with them have any interest, direct or indirect, in the Proposed Share Buy Back and in the resale of the Treasury Shares, if any.
The effects of the Proposed Share Buy Back on the shareholdings of the Directors and Substantial Shareholders of the Company, based on the Record of Depositors, as at 31 March 2017, assuming the Proposed Share Buy Back is carried out in full by the Company, is shown as below:
Cermat Ceria Sdn. Bhd.
State Financial Secretary Sarawak
Lembaga Tabung Haji
Haji Mohamad Bolhair bin Reduan
Datuk Amar Abdul Hamed bin Sepawi
Polit bin Hamzah
Hasmawatibinti Sapawi
UmangNangku Jabu
Datu Haji Chaiti bin Haji Bolhassan
Azizi bin Morni
Ali bin Adai
84,968,024
71,218,101
18,791,400
15,326,985
200,000
50,000
-
50,000
100,000
-
-
30.39
25.47
6.72
5.48
0.07
0.02
-
0.02
0.04
-
-
-
-
-
-
84,994,424
-
-
-
-
-
-
-
-
-
-
30.40
-
-
-
-
-
-
84,968,024
71,218,101
18,791,400
15,326,985
200,000
50,000
-
50,000
100,000
-
-
33.72
28.26
7.46
6.08
0.08
0.02
-
0.02
0.04
-
-
-
-
-
-
84,994,424
-
-
-
-
-
-
-
-
-
-
33.73
-
-
-
-
-
-
Substantial Shareholders and Directors
Before the Proposed Share Buy Back After the Proposed Share Buy Back
No. ofShares
% ofShare Capital
No. ofShares
% ofShare Capital
Direct Indirect
No. ofShares
% ofShare Capital
No. ofShares
% ofShare Capital
Direct Indirect
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10. HISTORICAL SHARE PRICE The table below sets out the monthly highest and lowest prices of SPB shares as transacted on Bursa Malaysia for the preceding 12 months:
2016 High (RM) Low (RM)
April 2.06 1.98
May 2.04 1.86
June 1.92 1.88
July 2.06 1.80
August 1.89 1.75
September 1.80 1.76
October 1.79 1.70
November 1.75 1.72
December 1.85 1.72
2017 High (RM) Low (RM)
January 1.85 1.74
February 1.81 1.70
March 1.75 1.67
Source: Yahoo Finance
The last transacted market share price on 7 April 2017, being the closing price of SPB shares at the latest practicable date prior to printing of this Circular was RM1.69.
11. PUBLIC SHAREHOLDING SPREAD The public shareholding spread of SPB as at 31 March 2017 was 38.48%. In implementing the Proposed Share Buy Back, the Company will ensure that a minimum public shareholding spread of 25% is maintained.
12. IMPLICATION RELATING TO THE MALAYSIAN CODE ON TAKE OVERS AND MERGERS 1998 (THE CODE) Pursuant to Practice Note 2.3(1) of the Code, where the combined holding of persons acting in concert is less than 33% of the voting shares of the Company and thereafter any member of that group acquires voting shares in the Company such that the combined holding of the group exceeds 33%, Part II of the Code will apply to all the members of the group of persons acting in concert.
In the event the Company acquires the full amount of its own shares as authorized under the Proposed Renewal of Share Buy Back and all its own shares so acquired are held as Treasury Shares or cancelled, the equity interest of the respective Substantial Shareholder and Directors as at 31 March 2016 will increase as disclosed in Section 9 above.
Notwithstanding the above, the said Substantial Shareholder and Directors are allowed to make an application to the SC for a waiver from implementing a Mandatory General Offer under Practice Note 2.9.10 of the Code, provided that the obligation is triggered as a result of action that is outside their direct participation.
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13. PURCHASE, RESALE AND CANCELLATION OF SPB SHARES MADE IN THE PRECEDING 12 MONTHS The Company did not purchase any of its own shares in the preceding 12 months. The last transaction was on 28 October 2008 and the total amount of own shares purchased to date is 436,100. These shares are currently kept as Treasury Shares.
There was no resale or cancellation of the Treasury Shares by the Company in the preceding 12 months.
14. CONDITIONS OF THE PROPOSED SHARE BUY BACK The Proposed Share Buy Back is conditional upon approval being obtained from the shareholders of SPB at the forthcoming AGM. This approval is subject to annual renewal.
15. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS None of the Directors or Substantial Shareholders of the Company or persons connected to them has any interest, direct or indirect, in the Proposed Share Buy Back.
16. DIRECTORS’ RECOMMENDATION The Board of Directors of SPB, having taken into consideration all aspects of the Proposed Share Buy Back, is of the opinion that the Proposed Share Buy Back is in the best interest of the Company and its shareholders. Accordingly, the Board of Directors recommends that the shareholders vote in favour of the ordinary resolution pertaining to the Proposed Share Buy Back to be tabled at the forthcoming AGM.
17. ANNUAL GENERAL MEETING The resolution to vote on the Proposed Purchase of Own Shares of up to 10% of the Issued and Paid Up share capital of SPB is set out in the Notice of Meeting in the Annual Report 2016 for the 20th AGM to be held at Damai Beach Resort Teluk Bandung Santubong 93756 Kuching Sarawak on Thursday, 18 May 2017 at 10 am.
If you are unable to attend and vote in person at the AGM, you should complete and return the Form of Proxy enclosed in the Annual Report 2016 to the registered office of the Company's Share Registrar, Tricor Investor & Issuing House Services Sdn. Bhd. at Unit 32-01 Level 32 Tower A Vertical Business Suite Avenue 3 Bangsar South No.8 Jalan Kerinchi 59200 Kuala Lumpur as soon as possible and in any event not less than 48 hours before the time set for holding the AGM. The completion and lodgement of the Form of Proxy will not preclude you from attending and voting in person at the AGM should you subsequently wish to do so.
18. FURTHER INFORMATION Shareholders are advised to refer to APPENDIX 1 of this Circular for further information.
Yours faithfully,For and on Behalf of Sarawak Plantation Berhad
Datuk Amar Abdul Hamed bin SepawiChairman
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APPENDIX 1
FURTHER INFORMATION 1. DIRECTORS’ RESPONSIBILITY STATEMENT This Circular has been seen and approved by the Directors of SPB who collectively and individually accept full responsibility for the accuracy and correctness of the information contained in this Circular and confirm that after making all reasonable enquiries and to the best of their knowledge and belief, there are no other facts, the omission of which will make the statement herein misleading.
2. MATERIAL LITIGATION Save as disclosed below, SPB and its Group of Companies is not engaged in any material litigation, claims or arbitration, either as Plaintiff or Defendant. The Directors of SPB are not aware of any proceedings, pending of threatened against SPB and / or its Group of Companies or of any facts likely to give rise to proceedings which might materially or adversely affect the position or business of the Company and / or its Group of Companies: (a) SP Suai sued 6 individuals (“Defendants”), seeking injunctive and declaratory relief against the Defendants for various acts of trespass over 2 parcels of Native Communal Reserve (“NCR”) Land which the Defendants had given consent for development into an oil palm estate. SP Suai also seeks to claim damages from the Defendants.
On 18 September 2013, the learned Judge decided as follows: (i) There is no concluded contract between the Defendants and SP Suai;
(ii) It has not been shown by the parties that the Defendants were members of the Penan Community for which the land was gazette for their exclusive use;
(iii) That the gazette to allow SP Suai to deal with native land has no retrospective effect; and
(iv) Generally, parties have not proven their case against each other.
SP Suai filed a Notice of Appeal against the whole of the learned Judge’s decision on 14 October 2013. The Defendants also filed a Notice of Appeal against the whole of the learned Judge’s decision on the same date. The Court of Appeal heard the appeal on 10 December 2015 and ordered that the case be remitted back to the High Court (before a different Judge) for a retrial. They were of the opinion that there was a mistrial in respect of the High Court’s finding.
The retrial proceeded on 26 July 2016. The Court delivered its ruling on 23 February 2017 as follows:
(i) Dismissed SP Suai’s claim;
(ii) Allowed part of the Defendants’ claims, namely SP Suai is prohibited from entering the 2 parcels of NCR Land and SP Suai has to vacate and remove its machineries, equipments and structures existing on the Defendants' 2 parcels of NCR land.
SP Suai filed a Notice of Appeal against the whole of the learned Judge’s decision on 9 March 2017 and will apply for a stay of execution in due course. No hearing date for the appeal has been fixed.
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2. MATERIAL LITIGATION (continued)
(b) On 13 July 2016, SPB and SPAD were served with legal proceedings. Amongst other things, the Plaintiffs seeked a declaration to the effect that they have acquired native customary rights and / or are the customary owners over land situated at / around all of Kampung Melugu Sri Aman.
SPB and SPAD entered appearance on 20 July 2016. On 10 August 2016, an application to strike out the Plaintiff’s Writ and Statement of Claim was filed and served on the Plaintiffs. The Court dismissed SPB and SPAD’s application to strike out the Plaintiff’s Writ and Statement of Claim on 17 October 2016. SPB and SPAD filed an appeal against the said decision on 9 November 2016.
The hearing date of the appeal has yet to be fixed. The Court has fixed a mention date on 13 April 2017 for the parties to update the Court on the status of the appeal and for the Court to monitor the progress of the appeal, accordingly.
(c) SPAD sued 16 individuals (“Defendants”), seeking injunctive and declaratory relief against the Defendants for various acts of trespass, unlawful occupation and illegal construction of a longhouse within an area covered under SPAD’s Provisional Lease of State Land. SPAD also seeks to claim damages from the Defendants.
The Defendants have refused to accept service of the Writ of Summons and Statement of Claim dated 5 January 2017 and the Notice of Application dated 9 January 2017 for interim injunction together with the Affidavit in Support.
SPAD applied and obtained an Order for Substituted Service on 6 February 2017 to serve the Writ, Statement of Claim and injunction application. The Notice of Advertisement was filed on 9 February 2017.
At the hearing of the interim injunction on 28 February 2017 at the Kuching High Court, the Judge directed that the matter be transferred to the Sibu High Court as the land in dispute is in Sibu.
At the hearing of the interim injunction on 28 March 2017 at the Sibu High Court, the learned Judged granted SPAD the interim injunction to prohibit the Defendants from entering in to the area covered under SPAD's Provisional Lease of State Land or to construct anything thereon.
3. MATERIAL CONTRACTS Save as disclosed below, there are no material contracts which have been entered into by SPB or its Group of Companies during the 2 years preceding the date of this Circular, other than that entered into in the ordinary course of business:
(a) By 2 Sale and Purchase Agreements both dated 1 September 2016, SPAD purchased 2 parcels of land together with oil palm plantations existing thereon from Magna Wide Sdn. Bhd. and Magna Wide Enterprise Sdn. Bhd. The total cash consideration for the 2 parcels of land together with oil palm plantations existing thereon was RM76 million. The 2 parcels of land measure approximately 1,908 hectares and are situated in the Puyut Land District.
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4. DOCUMENTS FOR INSPECTION The following documents are available for inspection at the Registered office of SPB during normal office hours on any business day falling from the date of this Circular and up to the time set for convening the AGM:
(a) The Constitution of SPB;
(b) Audited Financial Statements of SPB for the past 2 years ended 31 December 2015 and 31 December 2016;
(c) The Writ and relevant cause papers of the material litigation proceedings referred to in Section 2 above; and
(d) The Material Contracts referred to in Section 3 above.
